CORPORATE GOVERNANCE 112 Al-`Aqar Healthcare REIT | Annual Report 2024 Monitoring Risk Exposures • Reviews risk reports, dashboards, and Key Risk Indicators (KRIs) provided by management or the Risk function. • Ensures timely identification and escalation of material risks, breaches, or regulatory issues. 4 Oversight of Risk Management Function • Provides direction to and assesses the independence and effectiveness of the Head of Compliance and Risk or equivalent. • Ensures that the Risk Management function is adequately resourced and supported. 7 Oversight of Risk Mitigation Plans • Ensures effective and timely implementation of mitigation actions for high or critical risks. • Verifies that internal controls and risk responses are adequate and effective. 5 Crisis & Business Continuity Oversight • Reviews and monitors the organisation’s crisis management, disaster recovery, and business continuity plans. • Ensures preparedness and resilience in the face of disruptive events. 8 Interface with Other Committees • Coordinates with the Investment Committee, and Sustainability Committee to ensure risk oversight is integrated and comprehensive. • Avoids duplication of efforts and ensures that financial and non-financial risks are managed holistically. 6 Regulatory Compliance & Disclosure • Monitors compliance with applicable laws, regulations, and risk-related reporting requirements (e.g., SC, Bursa, ISSB, GRI). • Ensures transparent and accurate risk disclosures in annual and sustainability reports. 9 Annual Evaluation & Continuous Improvement • Conducts annual self-assessments of the Committee’s performance. • Recommends enhancements to the risk governance structure and processes. 9 Defining Investment Risk Parameters • Establish clear investment criteria (e.g., asset type, location, yield expectations, lease terms). • Set limits on exposure to high-risk property types or markets (e.g., speculative development, foreign currency risk). 1 Portfolio Diversification and Concentration Risk • Maintain a diversified portfolio across asset classes (retail, office, industrial, etc.) and geographies. • Avoid over-concentration in any single asset, tenant, or region that could impact financial resilience. 4 Evaluating Deal-Level Risks • Assess risks for each potential acquisition or disposal, including market, tenant, environmental, and operational risks. • Consider the impact on portfolio performance, gearing levels, and cash flow stability. 2 Monitoring Portfolio and Market Risk • Regularly review performance metrics, including occupancy rates, rental yields, and tenant profiles. • Stay informed on market trends and macroeconomic factors (e.g., interest rates, property cycles, inflation). 5 Ensuring Regulatory and Fiduciary Compliance • Monitor compliance with REIT regulations (e.g., gearing limits, distribution obligations, allowable asset types). • Review alignment with the REIT’s investment mandate and fiduciary duties to unitholders. 3 The BARC with the Board Investment Committee and the Board Sustainability Committee, after deliberation with the Management also sets the risk appetite parameters revolving around key risk areas: Strategic, Finance, Operations, Compliance, Market, Partnerships, and ESG (Environmental, Social, and Governance) Risks. The Board Investment Committee (BIC) The BIC plays a crucial role in overseeing investment activities and ensuring they align with an organisation’s risk appetite, objectives, and regulatory requirements. When it comes to managing risks, the committee’s responsibilities include: STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
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